In This Lesson
Industrial Policy
Introduction
Industrialization In India Under British Rule

Industrialization
The process by which an economy is transformed from primarily agricultural to
one based on the manufacturing of goods is called as Industrialization.
Industrialization has a vital role to play in the economic development of
underdeveloped and developing countries.
.
The prosperity which developed countries witnessing today is the result of
Industrialization
.
. The Industrial Revolution traces its roots to the late 19th century in Britain. Prior
to the revolution, fabrication and processing were generally carried out by hand
in people's homes.

Industrialization
.With the spread of Industrial revolution, we have witnessed major technological
changes, growth of factories, and the making of a new industrial labour force.
The advent of steam engine led to different types of machinery. Growth of the
metals and textiles industries allowed for the mass production of basic personal
.
and commercial goods
As manufacturing activities grew, transportation, finance and communications
industries expanded to support the new productive capacities.
Industrial revolution led to unprecedented expansion in wealth, increased labor
specialization, increased urbanization, migration of people from rural to urban
areas etc

Industrialization
Industrialization In India Under British Rule
India had world-wide market before the advent of modern industrial system
Since ancient times, Indian cotton textiles, gems and jewels, and spices like pepper
and cardamom, ivory and sandalwood continued to make trade a lucrative
business.
Armenian and Persian merchants took the goods from Punjab to Afghanistan,
eastern Persia and Central Asia
Silk and cotton goods from India dominated the international market in textiles.
Muslin and calicoes were in great demand across the world.
A variety of Indian merchants and bankers were involved in the network of export
trade financing production, carrying goods and supplying exporters.

Industrialization
All these have changed with the arrival of European companies to the Indian
subcontinent. India could not develop a sound industrial base under the colonial
rule.
.Industrial revolution led to the decay of Indian handicrafts and industrial
revolution was successful in de-industrializing India.
The intent behind colonial policy was to reduce India to the status of a mere
exporter of important raw materials for the upcoming modern industries in
Britain and, second, to turn India into a market for the finished products.
.
The decline in handicraft industries produced massive unemployment in India
and it also made Indian market deprived of local goods.

Industrialization
In 1813, the British Government began imposing high taxes on the import of
Indian textiles. On the other hand, British goods had virtually free entry into
India
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The results were evident: Between 1814 and 1835 British cotton goods exported
to India rose from one million yards to thirty-one million yards; while the value of
Indian cotton goods exported in the same seventeen years fell to one-thirteenth
its original size
.
In 1860s, with the increased export of raw cotton Indian weavers were starved of
supplies and forced to buy raw cotton at exorbitant prices.
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Factories in India began production, flooding the market with machine- goods
and it was hard for Indian weavers to compete with them.

Industrialization
This policy of British, exporting raw material and importing finished goods
adversely affected Indian Economy.
.
This along with devastating famines, over taxation and diversion of revenues back
to England were the primary factors for the deteriorating condition of the Indian
crafts community.
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During the second half of the nineteenth century, modern industry began to take
root in India but its progress remained very slow.
.
The cotton textile mills, mainly dominated by Indians, were located in the
western parts of the country, namely, Maharashtra and Gujarat, while the jute
mills dominated by the foreigners were mainly concentrated in Bengal.
.

Industrialization
.Subsequently, the iron and steel industries began coming up in the beginning of
the twentieth century
The Tata Iron and Steel Company (TISCO) was incorporated in 1907. A few other
industries in the fields of sugar, cement, paper etc. came up after the Second
World War.
'But, capital goods industries were lacking in India. There was hardly any capital
goods industry to help promote further industrialisation in India to help promote
further industrialisation in India
.Few manufacturing industries were not at all enough to fill the gap of country's
traditional handicraft industries which were displaced

Industrialization
Moreover, the growth rate of the new industrial sector and its contribution to the
Gross Domestic Product (GDP) remained very small.
Another significant drawback of the new industrial sector was the very limited
area of operation of the public sector.
This sector remained confined only to the railways, power generation,
communications, ports and some other departmental undertakings
Overall, by the end of British rule, Industrialization was marked by low capital
intensity, limited development of medium sized factory enterprises and
imbalance between consumer and capital goods industries.